http://www.nctimes.com/search/?l=50&sd=desc&s=start_time&f=html&byline=By ERIC WOLFFewolff@nctimes.com
The average price of gas at the pump in California in 2011 was $3.82 a gallon, the highest in the 41 years that the California Energy Commission has tracked such figures, in inflation-adjusted terms.
Pretty much the same trend holds locally. In 2011, the average price for a gallon of unleaded hit $3.82 in San Diego County and $3.80 in Riverside and San Bernardino counties, both the highest in the 11 years the Automobile Club of Southern California has been tracking the data.
The year in gas prices started with a rapid run-up when uprisings in the Middle East and North Africa made investors nervous, but the highest price in the year never reached the all-time peak seen in 2008. Instead, prices started high and stayed there as developing economies in Brazil, China and India increased their consumption, which in turn pushed prices up steadily all year. The higher gas prices forced locals to change how they drove and how they shopped.
"This has been the most expensive year, on average, for gasoline in U.S. history," said Charles Langley, a gasoline watcher for the advocacy nonprofit Utility Consumers' Action Network.
Consumers saw gas prices escalate quickly during the Arab Spring early in the year: Uprisings in Tunisia, Egypt and Libya spooked investors who worried disturbances could spread to major oil-producing nations like Saudi Arabia. In May in San Diego County, the price peaked at $4.27 and it peaked in Riverside and San Bernardino counties at $4.25. By midsummer, many of those concerns had eased and prices slid.
That peak price never cracked the all-time highs in 2008. That was the year when turmoil in the financial markets sent oil prices soaring to almost $4.67 a gallon in San Diego County and $4.80 in Riverside and San Bernardino, in inflation-adjusted terms, according to the auto club. But the onset of the Great Recession in the U.S. and Europe killed demand and sent oil prices to lows not seen since.
The increase in 2011 was all the more perplexing, considering that Californians used less gas. Gas consumption has fallen the past five years in a row, according to the California Board of Equalization. The board is slow to report data, but in the first eight months of 2011, the state burned 9.4 million gallons of gas, less than it has used in the first eight months of a year since before 2002, the earliest the board reports.
What it means is that local demand no longer drives the price of gasoline. Instead, increasing consumption from developing economies like those in Brazil, China and India are creating more demand for oil. The price for Brent North Sea Crude, which is the price of oil that feeds California refineries, has been between $90 and $120 a barrel all year, said Severin Borenstein, co-director of the Energy Center at UC Berkeley.
"That's the bottom line," Borenstein said. "If oil costs $100 a barrel, then that component alone is $2.40 a gallon. Then you start adding some refinery margins, some retail margins, the taxes, you're going to be well over three dollars a gallon."
High gas prices put a drag on the economy, as people spent money on gasoline that they might otherwise have spent on consumer goods.
"When gas goes up, everything else goes down," said Cherie Vinopal, a San Marcos resident.
Vinopal, a careful budgeter, said she spent 15 percent less per person on gifts this year, and her extended family shifted its Christmas dinner to Irvine from Los Angeles to balance driving distances for everyone.
Mike Richardson commutes from Temecula into North County for his job as a salesman. He drives a company truck during his work day, but he spends $107 a week for his commuting fuel.
"Just driving here is something I have to budget. I never used to think about it," he said.
Analysts disagreed over where gas prices are going in 2012. Langley said he worried about the confrontation with Iran, which could send oil prices soaring. But even without that immediate kick, demand from developing countries is only likely to increase, and if the U.S. economy rebounds, the average price will set another record high in 2012, he said.
But Borenstein expects prices to level off or even start falling as new sources of crude oil in North Dakota, Canada, and off the coast of Brazil come into the market.
"If you look at the futures market, though, oil for a year or two in the future is predicted to be cheaper than current oil," he said.
Then he added, "Not a lot cheaper."
Pretty much the same trend holds locally. In 2011, the average price for a gallon of unleaded hit $3.82 in San Diego County and $3.80 in Riverside and San Bernardino counties, both the highest in the 11 years the Automobile Club of Southern California has been tracking the data.
The year in gas prices started with a rapid run-up when uprisings in the Middle East and North Africa made investors nervous, but the highest price in the year never reached the all-time peak seen in 2008. Instead, prices started high and stayed there as developing economies in Brazil, China and India increased their consumption, which in turn pushed prices up steadily all year. The higher gas prices forced locals to change how they drove and how they shopped.
"This has been the most expensive year, on average, for gasoline in U.S. history," said Charles Langley, a gasoline watcher for the advocacy nonprofit Utility Consumers' Action Network.
Consumers saw gas prices escalate quickly during the Arab Spring early in the year: Uprisings in Tunisia, Egypt and Libya spooked investors who worried disturbances could spread to major oil-producing nations like Saudi Arabia. In May in San Diego County, the price peaked at $4.27 and it peaked in Riverside and San Bernardino counties at $4.25. By midsummer, many of those concerns had eased and prices slid.
That peak price never cracked the all-time highs in 2008. That was the year when turmoil in the financial markets sent oil prices soaring to almost $4.67 a gallon in San Diego County and $4.80 in Riverside and San Bernardino, in inflation-adjusted terms, according to the auto club. But the onset of the Great Recession in the U.S. and Europe killed demand and sent oil prices to lows not seen since.
The increase in 2011 was all the more perplexing, considering that Californians used less gas. Gas consumption has fallen the past five years in a row, according to the California Board of Equalization. The board is slow to report data, but in the first eight months of 2011, the state burned 9.4 million gallons of gas, less than it has used in the first eight months of a year since before 2002, the earliest the board reports.
What it means is that local demand no longer drives the price of gasoline. Instead, increasing consumption from developing economies like those in Brazil, China and India are creating more demand for oil. The price for Brent North Sea Crude, which is the price of oil that feeds California refineries, has been between $90 and $120 a barrel all year, said Severin Borenstein, co-director of the Energy Center at UC Berkeley.
"That's the bottom line," Borenstein said. "If oil costs $100 a barrel, then that component alone is $2.40 a gallon. Then you start adding some refinery margins, some retail margins, the taxes, you're going to be well over three dollars a gallon."
High gas prices put a drag on the economy, as people spent money on gasoline that they might otherwise have spent on consumer goods.
"When gas goes up, everything else goes down," said Cherie Vinopal, a San Marcos resident.
Vinopal, a careful budgeter, said she spent 15 percent less per person on gifts this year, and her extended family shifted its Christmas dinner to Irvine from Los Angeles to balance driving distances for everyone.
Mike Richardson commutes from Temecula into North County for his job as a salesman. He drives a company truck during his work day, but he spends $107 a week for his commuting fuel.
"Just driving here is something I have to budget. I never used to think about it," he said.
Analysts disagreed over where gas prices are going in 2012. Langley said he worried about the confrontation with Iran, which could send oil prices soaring. But even without that immediate kick, demand from developing countries is only likely to increase, and if the U.S. economy rebounds, the average price will set another record high in 2012, he said.
But Borenstein expects prices to level off or even start falling as new sources of crude oil in North Dakota, Canada, and off the coast of Brazil come into the market.
"If you look at the futures market, though, oil for a year or two in the future is predicted to be cheaper than current oil," he said.
Then he added, "Not a lot cheaper."
Call staff writer Eric Wolff at 760-303-1927, follow him on Twitter at ericwolff or find him on Facebook at facebook.com/NCTHousing.
Read more: http://www.nctimes.com/blogsnew/business/energy/energy-gas-prices-set-record-high/article_c8ad2ebf-36be-5f64-bbdb-6ee61fc6c7db.html#ixzz1hzMb708t
